Softcapitalist

Friday, 31 January 2014

There is no puzzle, it is a consequence of the "economic strategy" pursued by this government. It is inexcusable that large companies sit on billions in cash and run debts to buy shares back while everybody "waits" for the productivity to pick up as if it were either the employees' decision to work harder or a completely uncontrollable phenomenon like the wind. The employers are responsible for it, and the executives must put the cash to productive use.

This government seems to believe that cutting public expenditure will deliver some growth but all it has actually done apart from printing money was to funnel the economic resources into wealth accumulation at the top, mortgages and tax advantages for big business, with the net effect most people are worse off and have more debt.

Trickle down economics is a myth, it never worked and will not work simply because the capital owners have no incentive to pass on any of their gains. The perception that capital owners create jobs and wealth is nothing but a propagandistic metaphor because no products or services can be 'created' without labour. The only question is how fair is the distribution of the gains, and again, the perception that unless they get ever rising profits the rich elite will close the shop and go play golf all day long is false.

Without private and public investments it is impossible to have sustained growth and wide-spread well-being. The taxpayers are being taken for a ride and most people's lives have deteriorated. There is no need for more stats, and the explanations for this economic disaster don't even matter.

The government's 'economic trustworthiness' is a myth which is actually hard to explain, and one wonders what would it take to be broken.

Tuesday, 24 December 2013

This is not a debate about EU further expansion, nor about the new members absorption of funds - let's keep in mind some 40% of the EU budget goes to agriculture and France, Germany, Spain and the UK are taking the lion's share.

This is about free markets. The UK has to take a liberal or a protectionist stance. Either it supports free movement of goods, labour and capital, or it supports trade barriers, immigration controls and capital flows restrictions. The UK cannot expect Slovakia to hire Barclays Capital for privatisation of its assets, the Czech Republic to allow HSBC to open branches in Prague, or Poland to import some £9bn worth of goods (btw more than Australia) on one hand, and on the other to tell their citizens that Britain believes their citizens are all lazy benefit fraudsters.

Britain should stop lecturing the world about principles it does not adhere to. It should stop behaving like it deserves everything and its interests are above everyone's else. This arrogance and unfairness cannot go unnoticed for ever. There is still some respect left for Britain in the European ambit precisely because it has been perceived as a flag bearer for freedom and equity. Its institutions commanded some respect because they are supposed to safeguard these principles.

And above all, this is not about the Finnish engineers and Dutch lawyers. It is about the Romanian nanny and Estonian bartender who provide just as many (if not more) benefits to the economy.

Mr Cameron, your rhetoric is despicable, your argumentation is ridiculous and your morality is repugnant. My vote for you is: to the bin of history.

Sunday, 22 December 2013

Building homes and roads and rail or air infrastructue is not a Victorian invention nor did they do it perfectly. Actually the Victorians missed a big trick as they had the wealth of an empire and failed to use it for the benefit of all or for many generations.

Before arguing whether the Victorian heritage is good or bad and whether it deserves to be the ultimate benchmark everyone in Britain seems to be obsessed with, it is worthwhile perhaps examining who outside the belssed shores of the British isles has had some vision in more recent times.

The fact that it takes decades to build anything with public money, and it is several times more expensive to build that anything in Britain than elsewhere it should raise the basic question: Is it anything wrong with us? Perhaps we are just different, not better.

Britain has been sold a few myths extraordinarily well. We are a small island and we don't have public money, we don't have any money to spend. There are some 50 countries in the world more densely populated than Britain, even London is actually pretty fine on that front so there is plenty of room for urbanisation beyond dreaded greenbelts etc.

A one thousand six hundred billion economy which cannot build a runway, a tube stop or a bridge in more than 3 decades deserves little praise. It actually deserves pitty and is a model to be avoided. Sad this negative example is set by the land of people who like lecturing the world about right and wrong.

Wednesday, 4 December 2013

The Tories economic credentials have been built on a carefully crafted narrative around cutting Britain's debt. To the average person this seems to be the public debt. We were told the public debt level was unsustainable because of too many welfare benefits abused by too many, and a large government bloated to the point of bursting. So the people thought hell we need to eat out less, buy cheaper nappies, pay for university tuitions and put on a fleece in the salon instead of turning the heating like in the irresponsible years before 2008. Indefinite austerity is necessary to cure these excesses of the past, no mater who's guilty and who pays for them.

Tough bit just. Touching to tears the British solidarity with its wise leaders.

The trouble is the government has regularly ignored the corporate debt and the household debt. In essence, big corpo are sitting on piles of cash and enjoy bumper profits helped by historically low effective tax rates, while smaller companies on one hand have not reduced their debts, and on the other hand cannot invest because they don't get loans from the banks.

The consumers are tricked into amassing more debt in the form of mortgages and consumer credit. The polarisation of debt is appalling, a consequence of the net outflow of wealth from the poor to the rich. This calls for an honest picture of the debt in the economy and government preoccupation for their world-record levels.

It is the government job to bring down all debt components and grow the economy through investment and fair wealth distribution.

Saturday, 30 November 2013

If Cameron were true to free markets he would encourage free movement of labor, goods and capital. He's defending to death the movement of capital since this makes his banks and big corporations rack up the billions in profit which sustain his party financed and united. He is OK with the movement of goods because he needs to be seen he is promoting British exports, though despite the pound devaluation, lower labor costs, lower corporate rate and historically low effective tax rates paid by its businesses at home, despite healthy global markets the trade deficit has widened and the Albion's competitiveness is in tatters.He has never been a true defender of free movement of people, though he finds it inconceivable that Brits would not be able to settle wherever they wish as no nation in their own mind would not open their arms to the skills, expertise and joy that are always brought along by HM subjects. He is now starting a bitter crusade against foreigners, showing to the world that xenophobia is not Daily Mail's privilege, is indeed a strong national attribute. He should feel embarrassed though of his low blow on Romanians and Bulgarians. Nigel Farage is a low character, low IQ challenger to the crown of fanatic nationalism who's not expected to recognise the scientific evidence in favour of immigration, nor not to unfairly turn his venom against two nations which harmed Britain interests in no way so far. Cameron is supposed to be smarter, better and broader in his argumentation. His point is the poor East Europeans are driven to Britain by the income gap. He has been embarrassed by the fact that most immigrants are from PT, ES, GR and IT, where the GDP per head is much higher than in say HU, SK or LV yet came to the UK in droves, simply because they can, not even because are not under Farage's microscope. And, mind you, the Italians are not all of them highly skilled economists, engineers or bankers. Many of them serve pizzas - precisely the type of jobs the Brits are supposed to lose to Bulgarians. The Portuguese may walk the mini-Brits into the parks and are paid below the national minimum wage or illegally. And I read very little in the Daily Mail about the growing number of British homeless begging on Regent Street with their dogs impressing the shoppers with their candid glances. Are they going to be deported?What if Bulgaria and Poland imported no more than 30 Indian or Japanese cars manufactured in Britain if the Brits put a cap on their emigrants? What if Barclays Capital would be excluded from making the books for the next juicy privatisation in Lisbon or Riga or Bucharest?What if Spain or Greece removed access to their health services for all the Brits retired in Malaga or Rhodes, and by the way I am sure these peaceful residents of their sunny coasts don't fly back to Croydon to treat their diabetes. So make up your mind Cameron: are you a man or a lousy headless chicken?http://www.ft.com/cms/s/0/b2b10574-56c3-11e3-ab12-00144feabdc0.html?siteedition=uk&ftcamp=crm/email/20131126/nbe/ExclusiveComment/product#axzz2m8owFJjy

Wednesday, 20 November 2013

Oh dear. I thought the rich are rich because they have this ... flair. Ok one may place Rooney alongside Romney and Osbourne (both George and Ozzy actually) and thats a bit unfair since raw talent is not always accompanied by brain power.

But the sad truth is most rich are rich because they were born so (George, not Ozzy) and they are pretty incapable of making the most out of their fortunes if not something good for the society. Despite being privately educated.

The other thing is how morally pathetic to be a wealth manager. Just a clown in a suit, a toff entertainer, someone to carry the briefcase between phaesant shootings and racing Aston Martins at Silverstone. Charging the fat cats top dollar for scientifically wasting their money. What a grotesque circus! But hey, prostitution has always paid handsomely. No need to be ashamed of yourselves. Just brush your tongues properly before bed to take the bitter taste of brown off them.

Friday, 13 September 2013

Treating the symptoms and not the cause. Yet another example of "thinking out of the box".
Houses are unaffordable because there is demand way above the supply. The supply is restricted because of the consistent policy applied by successive governments to encourage nymbism in the name of democracy (or sacrosant property rights). This strategy is the fruit of excellent propaganda carried out by the well-off who own land and capital. If you believe that owning a house you are better off because your "asset" grows in price and that the zillions of pounds sunk into bricks (call it unproductive capital) come at no cost for you from other parts of the economy, think again. You may feel wealthier, but your cost of living surpasses your asset appreciation, and you are in effect poorer.

The propaganda machine worked very well to convince people there is nowhere in sight to build more. That Britain is a densely populated small island. The words "redevelopment" and "high rise" have been taken out from the dictionary but may apply to the top end of the housing market, or in remote areas nobody should really live in.

Mr Carney is a charming man, but if he believes houses are affordable and there is no "bubble" I would like him to answer a few questions:
1) he's paid some £874,000 including a £250,000-a-year housing allowance. So would he support legislation requiring all employers to pay 25-30% housing allowance on top of the regular income?
2) has he looked at median house price and median income, or at average house prices on a GDP-weighted basis? Is the person in the middle of the economy more, or less able to buy a house in 2013 than in 2007? If wealth is created in London and house prices in London surpass income then should the BoE be worried that the sustainability of the economic recovery is feeble?
3) has he asked the person who packs his wife's bags at their local Sainsbury where do they live, how long does it take to get to work, and how many people share the bathroom?
4) has he looked at the average price per sq meter and average household area? Perhaps house prices have not shot up in a bubble but houses are smaller and smaller so his "macro" analysis has some flaws

Rest assured, Mr Carney is going to print money, on paper, plastic or alufoil to ensure people will believe it is in their interest to go on ever higher debts for ever smaller homes. They call this "affordable mortgages". Don't waste any second. Go buy a house, the timing is right!